Asia Fuel Oil-Market holds firm despite reduced buying appetite

Cash differentials of Asia’s 380-cst fuel oil edged lower on Monday but remained near Friday’s two-month high. Despite a decline in buying interest for physical cargoes relative to the start of the month, traders said 380-cst fuel oil cash premiums and time spreads were holding firm near their recently elevated levels as sellers did not offer down the market.

Two cargo trades were reported in the Platts window on Monday.

Trafigura sold two 20,000-tonne 380-cst fuel oil cargoes to Hin Leong at a $1-$1.50 a tonne premium to Singapore quotes, sources said.

Trafigura had been an active buyer of 380-cst fuel oil cargoes in the window, snapping up 1.031 million tonnes of the fuel since the start of the month.

On Thursday, the Swiss trading house sold its first 380-cst cargo for the month, sources said.

At the start of the month, Trafigura bought 380-cst fuel oil cargoes in the window at discounts around 25 cents a tonne to Singapore quotes, sources said.

With fuel oil physical trade volumes in the window receding from their recent highs over the past few sessions, traders said physical trade volumes are likely to remain low in the second half of the month when compared to the first half.

Physical trade volumes in the first half of September averaged at 176,200 tonnes per day in the window, above the 68,000 tonne daily average in the first half of August.

A total of 1.802 million tonnes of high-sulphur fuel oil has traded in the window since the start of the year, compared to 1.4 million tonnes in August.

China’s fuel oil output in August fell 3.4 percent compared to the same time last year to 2.161 million tonnes, data from the National Bureau of Statistics showed on Monday.

China’s fuel oil production totalled 18.386 million tonnes in the first eight months of the year, up 2.5 percent from the year before.

Source: Reuters

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